Common use of Effectiveness Requirement Clause in Contracts

Effectiveness Requirement. The Company agrees to use its best efforts to keep the Resale Registration Statement continuously effective and the Prospectus usable for resales for a period commencing on the date that such Resale Registration Statement is initially declared effective by the Commission and terminating on the date when all of the Registrable Securities covered by such Resale Registration Statement have been sold pursuant to such Resale Registration Statement or have ceased to be Registrable Securities (the "EFFECTIVENESS PERIOD"); provided, however, the Company is permitted to suspend sales of the Registrable Securities during any Delay Period. After the Resale Registration Statement has been declared effective by the Commission, if at any time the Resale Registration Statement or the Prospectus thereunder cannot be used for the resale of the Registrable Securities for any reason (including without limitation by reason of a stop order or the Company's failure to update the Resale Registration Statement but subject to any bona fide Delay Period), then, subject to subsection (e) below, the Company will pay to each Holder, as liquidated damages and not as a penalty, an amount equal to 1.0% of the aggregate purchase price for the Unsubscribed Shares paid by such Holder pursuant to Section 1.3 of the Purchase Agreement for each month or part thereof that such Resale Registration Statement cannot be used for the resale of the Registrable Securities, payable in monthly installments. The payment of liquidated damages pursuant to this paragraph shall be made by the Company, at its option, either in cash or in Liquidated Damages Warrants having a value (such value to be determined as set forth below) equal to such liquidated damages. Such Liquidated Damages Warrants shall contain the same terms as the Standby Commitment Fee Warrants except that they shall have an exercise period of one year from the date of actual issuance, and they shall have an exercise price (x) with respect to the first installment of Liquidated Damages Warrants, equal to the Average Share Price (as defined in the Purchase Agreement) on the date on which the Company first becomes obligated to pay the liquidated damages and (y) with respect to any subsequent installment of Liquidated Damages Warrants, on the first Business Day of the month period for which such installment is issuable. The value of such Liquidated Damages Warrants shall be equal to their Black Scholes Warrant Value. Liquidated damages shall be deemed to commence accruing on the day on which the event triggering such liquidated damages occurs. The liquidated damages to be paid to the Holders pursuant to this Section 2(b) shall cease to accrue on the day the Holders have received notice from the Company regarding the reinstatement of effectiveness of the Resale Registration Statement. The parties hereto agree that the liquidated damages provided for in this Section 2(b) constitute a reasonable estimate of the damages that will be suffered by the Holders by reason of the failure of the Resale Registration Statement to remain effective in accordance with this Agreement.